Time to Hunker Down!

Time to Hunker Down!

• MHFinance. Yet another paradigm shift in the way we do $$$?

• Your response to last week’s posting regarding muzzling this blog…

• New Day a – Coming? Dissolution of GFA Management, Inc., dba PMN Publishing.


MHFinance. Yet another paradigm shift in the way we do $$$? Here’s an Executive Summary of sorts: ‘The days of third party chattel (personal property) finance for HUD Code manufactured housing – particularly homes in, or going into, landlease (nee manufactured home) communities, are all but gone; Yes, LLCommunity owner self – finance works for the few, but is ify for everyone else – Thanks to federal S.A.F.E. Act & other pending regulatory legislation. Today’s new and resale home transactions trend to be cash deals; leased homes (apartments) on – site; rejuvenated, modified lease – option arrangements; maybe even a True Lease alternative.’

Anyone active in the HUD Code manufactured housing (‘MH’) business since the turn of the century, knows of the industry’s financial self – emasculation (i.e. Turning homebuyers ‘upside down’, by dint of predatory lending practices) during its’ too brief renascence before and after 1998, a year when we shipped 372,843 new homes. Subsequently and consequently, we suffered more than 250,000 repossessed (manufactured) homes; saw LLCommunity occupancy plunge at least 10 percent, from an historic high national average of 95 percent; and rarely saw MH chattel loans securitized and sold on the secondary market – slowing our source of new capital for subsequent home sales. That situation has remained unchanged for a decade, and few see any possibility of improvement in the near or even foreseeable future.

LLCommunity owner self – finance of on – site home sale transactions has been around since the emergence of this unique, income – producing property type 60 years ago. It’s just taken different forms, and has been practiced to varying degree, over the decades, in response to infill needs, local housing market conditions, national economy, and availability of third party finance from local banks and credit companies. Self – finance hit its’ stride during the past ten years, as it’s somewhat filled the post renascence chattel finance gap described in the previous paragraph. In the Manufactured Housing $$$ Primer, published by PMN Publishing during 2010, the two most common, self – finance methodologies are defined as:

• ‘buy here – pay here’. A chattel finance or mortgage process that occurs on – site in LLCommunities when the property owner/operator collects mortgage payments from homeowners, and services said mortgages.

• ‘captive finance’. A chattel finance or mortgage process that occurs on – site in LLCommunities when a third party collects mortgage payments from homeowners, and services said mortgage in behalf of the property owner/operator.

As finance – related federal cum state legislation, and new bureaucratic watchdogs, are added to enhance regulatory oversight of consumer lending practices, both methodologies come under increased scrutiny, making the first alternative costly and treacherous; the second one, only slightly less so. For statistical data relative to estimated billions of dollars of ‘contract sale paper’, held among the 500+/- known portfolio owners/operators of LLCommunities, read the 22nd annual ALLEN REPORT. *1 This brings us to the third and latest paradigm shift in ‘the way we do $$$.’

Sunbelt regions have long experienced, and oft benefited from, periodic plethora of cash transactions, when marketing and selling new and resale homes on – site in LLCommunities. And in some blue collar local housing markets, as well as near military bases, even adjacent to college campuses, the availability of ‘manufactured homes (weekly or monthly pay) rentals’ in LLCommunities, has long been a symbiotic relationship for landlords and tenants. And now, partly in reaction to ‘enhanced regulatory oversight’ mentioned in the previous paragraph, LLCommunity portfolio owners/operators, large and small, have rejuvenated a rewritten Lease – Option (‘LO’) alternative that generally skirts the federal S.A.F.E. Act (‘Safe And Fair Enforcement’ of Mortgage Licensure), and state implementation thereof. Description of this LO program? Read details in the April or May issue of the Allen Letter professional journal.*1 And then there’s True Lease – which gives us something further, along this line, to cover in a future blog posting.

With all that said, where’s your future lie, as a HUD Code manufactured housing aficionado (e.g. manufacturer and MHRetailers) and or landlease community owner/operator, relative to the marketing and financing of new and resale home transactions on – site per this property type? In the first instance, manufacturers need – no, must, sell more new homes to survive, and eventually reverse, this nigh 15 year malaise (i.e. During last three years we’ve shipped only 50,000+/- new HUD Code homes per year!). How to improve on this? In part, continue to design and aggressively market Community Series Homes (‘CSH’) – usually singlesection models with front end porches or small multisection homes, to LLCommunity owners/operators. How to do this? Via nearly three dozen (should be four to five dozen in number!) Business Development Managers (‘BDM’), named and tasked with ‘walking and talking LLCommunityese’ from coast to coast. For information about CSH, contact Don Westphal via (248) 651-5518. And, for a copy of the latest BDM list, see end note # 1.

Now, how ‘bout the LLCommunity owner/operator? To begin with, these properties have to be READY in which to sell and finance new and resale homes. Most are not! Begin with attractive Curb Appeal (i.e. ‘How the property looks and smells, so to speak, to the casual passerby’); Ensure ‘good resident relations’ to Ensure ‘more resident referrals’, to Ensure ‘ maximum resident retention’; Practice professional property management (Are all your on – site managers trained and certified as Accredited Community Managers® or Manufactured Housing Managers? If not, they should be!); and, just as important as the first three readiness conditions, be sure managers and sales staff KNOW HOW to calculate ‘affordable’ and ‘risky’ Price Points for new and resale homes in their local housing market, using AMI (Area Median Income) for the local housing market, and AGI (Average Gross Income) of the individual or family buying the home. *2

Finally; when the property is truly READY, follow the lead of the too few forward – looking portfolio owners/operators, who’re aggressively marketing new and resale homes and properties, effectively using euphemisms (Reread last week’s blog) to position their product and lifestyle right amongst the best of the best alternatives in site – built housing, in and outside Sunbelt regions! *3

Your considered opinion and practical feedback on this timely $$$ description and industry/asset class recovery prescription?


Your response to last week’s posting, regarding muzzling this blog. Here’s a sampling of written responses, lightly edited, from blog floggers (readers) like you. There wasn’t a single response suggesting agreement with muzzling this blog!

“Good stuff. Personally, I do not like muzzles on anyone or anyone’s perspective, but especially not on someone who loves the industry and wants it to flourish. At the end of the day, whether we agree or not, we always have to answer the tough question, paraphrasing John Stuart Mill: ‘Either we find a better way of doing things or we confirm and thereby strengthen the current way.’ “ TC

“It sounds like you’ve hit on some ‘soft spots’ on the underbelly of the (our industry’s) beast, now the beast is pissed and trying to bite back. Good job. This is what journalism is all about, isn’t it?” JK

“I would hardly characterize your blog as doing ‘more harm than good’. To the contrary, it’s a timely, refreshing, candid source of valuable industry information that never comes across, to me, as negative, or in any other way intended to hurt our chances for an industry recovery. To me, it’s quite the opposite – you may point out where our weaknesses are, or where leadership is lacking, but you always do it in a way that motivates me, and others, to implement change and become more involved in the restructuring, and ultimately – the revival of the manufactured housing industry. Keep up the good work.” GH

“Wow, George. You are hitting the target! This straight talk is what the industry needs. Will it matter? Fall on deaf ears? Many of these folk (as you call them) are in a similar denial as Gadaffe is over in Lybia. None are mean – spirited, just still worshipping false gods of ‘how things used to be.’ “ MP

Hey, Thanks for the strong positive response to the unexplained ‘Attempts to muzzle this blog’ subtitle in last week’s blog posting. I, and hopefully many of you, feel empowered anew! GFA


New day a – coming? Dissolution of GFA Management, Inc., dba PMN Publishing.
Maybe some details next week, or the week or two thereafter. Will tell you this, however; some of what I’ve been doing these past several decades will likely be used to enhance LLCommunity owners/operators presence on the national scene; others seek to improve statistical research and reporting, relative to the asset class; yet others, are desirous to improve professional property management training and certification; and, last but not least, a new initiative might be on the offing, to unite and serve small LLCommunity owners/operators nationwide! Bottom line? I’m cautiously optimistic my plans to at least semi – retire by the end of 2011, are realistic and achievable. What will I be doing in 2012? Stay tuned….


Tomorrow I fly to Albany, NY., to participate in the New York Housing Association’s Super Symposium II. Sure hope to see and talk with many of you there. As I’ve written here before, this is the strongest lineup of presenters I’ve seen, in the MHIndustry & LLCommunity asset class, in a long time. How can you not be present? To register, phone (518) 867-3242. Tell Nancy, ‘George sent me!’ See YOU there!


Potpourri. ‘Thanks’ to the many of you who’ve sent your ‘Congrats!’ this past week. Means a very great deal to me. Maybe we’ll be together the evening of 1 August 2011 at the RV/MH Heritage Foundation’s Hall of Fame Induction Banquet in Elkhart, IN. For details, phone (574) 293-2344 and talk to Al Hesselbart.

And watch for an exciting story to soon come out of Maine! Talked with Karen Brown – Mohr this week, and is she ever ‘pumped’ about her association’s recently completed, day long strategic planning, brainstorming event. Can hardly wait to write about it! Are YOU planning a similar ‘take control of your future’ event? If so, invite me to participate as a provocateur, scribe, and historian.

Are YOU reading, Factory Built Bulletin? Quite a few ‘industry insiders’ do. For $5.00/year, receive this periodic ‘source of factory – built housing information’ (for homeowners), published since 2003. I do. Phone (866) 764-5505 to subscribe.

End Notes.

1. To order the 22nd annual ALLEN REPORT (Ask for special pricing); and or the Manufactured Housing $$$ Primer, only $29.95 postpaid, phone (317) 346-7156

2. For ACM® information, phone Lisa Brechtel @ NCC: (703) 558-0666. For MHM class information; and to order a FREE copy of the ‘Ah Ha! & Uh Oh! Worksheet’ for calculating new and resale home price points, phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764.

3. Here’s a tip to know whether your property and staff is truly READY to go! Be sure the Five ‘Ps of Marketing’ are in place and positioned, e.g. Place (location); Price (housing prices & site rent in sync with local housing market); Promotion (measure the volume and conversion rates of phone calls to on – site visits to approved applications); Product (Homes & property ready to SHOW now?); and, in this observer’s opinion, People (Is your on – site staff trained and motivated to effectively sell homes and lease homesites?). How to really know all this is coming together ‘rightly’? Have the property(ies) Mystery Shopped, by telephone and via unscheduled on – site visits, by anonymous, experienced professional ‘shoppers’! For information, call the MHIndustry HOTLINE.

George Allen, Realtor®, CPM®Emeritus, MHM
Consultant to the Factory – built Housing Industry &
The Landlease Community Real Estate Asset Class
Box # 47024, Indianapolis, IN. 46247 (317) 346-7156

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